Legislature(1999 - 2000)
03/03/2000 03:26 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 3, 2000
3:26 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Lisa Murkowski
Representative John Harris
Representative Tom Brice
Representative Sharon Cissna
MEMBERS ABSENT
Representative Jerry Sanders
COMMITTEE CALENDAR
HOUSE BILL NO. 211
"An Act relating to liability for providing managed care
services, to regulation of managed care insurance plans, and to
patient rights and prohibited practices under health insurance;
and providing for an effective date."
- MOVED CSHB 211(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 378
"An Act eliminating certain taxes under AS 21.09 on premiums from
the sale of workers' compensation insurance; relating to the
establishment, assessment, collection, and accounting for service
fees for state administration of workers' compensation and worker
safety programs; establishing civil penalties and sanctions for
late payment or nonpayment of the service fee; and providing for
an effective date."
- MOVED CSHB 378(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 398
"An Act relating to the Alaska Life and Health Insurance Guaranty
Association."
- MOVED CSHB 398(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 207
"An Act relating to the registration of persons who perform home
inspections; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 224
"An Act requiring a public employee labor organization
representing employees of a school district, regional educational
attendance area, or a state boarding school to give notice before
striking."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 211
SHORT TITLE: MANAGED HEALTH CARE INSURANCE
Jrn-Date Jrn-Page Action
4/22/99 914 (H) READ THE FIRST TIME - REFERRAL(S)
4/22/99 914 (H) L&C, JUD, FIN
5/10/99 (H) L&C AT 3:15 PM CAPITOL 17
5/10/99 (H) HEARD AND HELD
5/10/99 (H) MINUTE(L&C)
10/22/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
10/22/99 (H) MINUTE(L&C)
2/04/00 (H) L&C AT 3:15 PM CAPITOL 17
2/04/00 (H) -- Meeting Canceled --
2/16/00 (H) L&C AT 3:15 PM CAPITOL 17
2/16/00 (H) Heard & Held
2/16/00 (H) MINUTE(L&C)
2/16/00 (H) MINUTE(L&C)
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 378
SHORT TITLE: WORKERS COMP AND WORKER SAFETY
Jrn-Date Jrn-Page Action
2/16/00 2211 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2212 (H) L&C, JUD, FIN
2/16/00 2212 (H) 4 FISCAL NOTES (ADM, DCED, 2-LABOR)
2/16/00 2212 (H) GOVERNOR'S TRANSMITTAL LETTER
2/28/00 (H) L&C AT 3:15 PM CAPITOL 17
2/28/00 (H) Heard & Held
2/28/00 (H) MINUTE(L&C)
3/03/00 (H) JUD AT 1:00 PM CAPITOL 120
3/03/00 (H) <Bill Postponed to 3/6>
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 398
SHORT TITLE: LIFE AND HEALTH INSURANCE GUARANTY ASSN
Jrn-Date Jrn-Page Action
2/16/00 2218 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2218 (H) L&C, JUD
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 207
SHORT TITLE: LICENSE HOME INSPECTORS
Jrn-Date Jrn-Page Action
4/21/99 900 (H) READ THE FIRST TIME - REFERRAL(S)
4/21/99 900 (H) L&C, JUD, FIN
10/21/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
10/21/99 (H) MINUTE(L&C)
2/18/00 (H) L&C AT 3:15 PM CAPITOL 17
2/18/00 (H) Heard & Held
2/18/00 (H) MINUTE(L&C)
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
JANET SEITZ, Staff
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
POSITION STATEMENT: Provided information on HB 211.
JIM JORDAN, Executive Director
Alaska State Medical Association
4107 Laurel Street, Anchorage, Alaska 99508
POSITION STATEMENT: Testified on HB 211.
BOB LOHR, Director
Division of Insurance
Department of Community and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
POSITION STATEMENT: Answered questions on HB 378.
RICHARD L. BLOCK, Christian Science
Committee on Publication for the State of Alaska
360 West Benson, Number 301
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 211.
PAUL GROSSI, Director
Division of Workers' Compensation
Department of Labor and Workforce Development
P.O. Box 25512
Juneau, Alaska 99802-5512
POSITION STATEMENT: Explained amendments to HB 378.
BRAD THOMPSON, Director
Division of Risk Management
P.O. Box 110218
Juneau, Alaska 99811-0218
POSITION STATEMENT: Answered questions on HB 378.
CHRIS ROSS, Corporate Health, Safety and Environmental Manager
NANA Development Corporation
341 West Tudor Road, Suite 202
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 378.
JOHN MANLY, Staff
to Representative John Harris
Alaska State Legislature
Capitol Building, Room 110
Juneau, Alaska 99801
POSITION STATEMENT: Introduced HB 398 on behalf of the sponsor.
JOHN GEORGE, Lobbyist
for American Council of Life Insurance
3328 Fritz Cove Road
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 398.
MARY BETH STEVENS, Legislative Director for Alaska
American Council of Life Insurance
1001 Pennsylvania Avenue, Northwest
Washington, DC 20004-2599
POSITION STATEMENT: Testified on HB 398.
ROBERT SWEENEY, Counsel
American Council of Life Insurance
1001 Pennsylvania Avenue, Northwest
Washington, DC 20004-2599
POSITION STATEMENT: Testified on HB 398.
DONALD THOMAS, Executive Director,
Alaska Life and Health Insurance Guaranty Association
P.O. Box 103415
Anchorage, Alaska 99510
POSITION STATEMENT: Testified on HB 398.
TOM MANNINEN, Legislative Aide
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
POSITION STATEMENT: Explained HB 207, Version W.
ACTION NARRATIVE
TAPE 00-24, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:26 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro,
Harris and Brice. Representatives Murkowski and Cissna arrived
as the meeting was in progress. Representative Sanders was
absent.
CHAIRMAN ROKEBERG informed listeners that public testimony on HB
224 would be taken at the House Labor and Commerce Standing
Committee meeting on March 6, 2000.
HB 211-MANAGED HEALTH CARE INSURANCE
CHAIRMAN ROKEBERG announced the first order of business would be
HOUSE BILL NO. 211, "An Act relating to liability for providing
managed care services, to regulation of managed care insurance
plans, and to patient rights and prohibited practices under
health insurance; and providing for an effective date."
Number 0284
CHAIRMAN ROKEBERG informed members that the Senate and House
Conference Committee on the national Patients Bill of Rights had
met the previous day and was expected to have a bill ready this
year, and that it will include provisions for allowing causative
actions against providers.
Number 0424
REPRESENTATIVE HALCRO moved to adopt Version I [1-LS0472\I, Ford,
2/24/00], as the working document before the committee. There
being no objection, it was so ordered.
JANET SEITZ, Staff to Representative Norman Rokeberg, Alaska
State Legislature, explained the changes in Version I. On page
3, lines 3 and 4, a change was made to clarify confusing
language; a clarifying change also was made on line 18. On page
5, line 6, after "currently offered," the phrase "or that may be
offered in the future" was added. In the same section,
provisions concerning the Division of Insurance and its overview
were deleted. Ms. Seitz explained that the change had been made
to lessen the involvement of the Division of Insurance, limiting
it to a fiscal note.
REPRESENTATIVE HALCRO asked whether there was a revised fiscal
note.
MS. SEITZ said that was not yet available. She continued with
the explanation of Version I. On lines 25-30, in response to
concerns about services being reasonably available in the
community, the phrase "or that adequate referrals outside the
community be available" was added. That allows a patient from a
rural area to go to a major regional hospital for care that is
not available in his home community, or to an Outside facility,
such as the burn center in Seattle, for care that is not
available in Alaska.
MS. SEITZ reported that on page 6, line 22, the phrase "benefits
relating to and restriction on non-participating provider
services" was added. On page 7, lines 8-15, language was
reinserted that allows a non-network option, such as a copayment
or higher premium, if it is actuarially sound.
Number 0650
CHAIRMAN ROKEBERG referred to the state attorney general's 1995
memorandum, copies of which had been sent to committee members.
In a nutshell, the State of Alaska has a formal opinion mandating
that any health care policy must include individuals' choice of
providers, so the issue of a "point of service option" is moot in
the eyes of state law. The memorandum goes on to say that a
differential in charges can be made. There is nothing in this
legislation [HB 211] that changes the attorney general's ruling.
Number 0733
MS. SEITZ resumed her review of changes in Version I. On page 8,
line 12, through page 9, line 1, an addition was made to language
regarding continuing treatment of the terminally ill, defining
"terminal" as "life expectancy of less than one year." On page
15, a change was made adding a reference to "religious, non-
medical providers." The only other changes delete references to
the Division of Insurance. Ms. Seitz concluded by saying that
this is the shortened version, and there is an amendment
concerning the research options which the committee was
discussing.
CHAIRMAN ROKEBERG told the committee that in addressing the major
issue of confidentiality, it was decided not to include that in
the proposed CS because comparable federal regulations [binding
on Alaska] already are in place. That lowered the fiscal note
substantially by saving the cost of developing state regulations.
Number 0875
MS. SEITZ noted that the committee had requested a legal opinion
from Mike Ford, Legislative Counsel [drafter of the bill],
asking if anything in the bill prohibits a surcharge for
nonemergency treatment provided at a hospital emergency room; Mr.
Ford said he sees nothing in the bill that prohibits that.
CHAIRMAN ROKEBERG said that would allow a small charge as a
gatekeeping device to keep people from overusing the emergency
room or to share in the costs of that emergency room.
Number 0938
JIM JORDAN, Executive Director, Alaska State Medical Association,
participated by teleconference. He said the revisions appear to
accomplish what was needed, and that the amendments look fine to
him as well.
Number 0979
CHAIRMAN ROKEBERG asked Ms. Seitz to explain the three amendments
before the committee.
MS. SEITZ said Amendment 1 removes the Director of Insurance from
some tasks that remained in Version I. Amendment 1 [1-
LS0472\I.1, Ford, 2/25/00] read:
Page 9, line 27:
Delete "director shall"
Insert "managed care entity shall provide"
Page 9, line 28:
Delete "require"
Page 9, line 31:
Delete "provide"
Page 10, line 2:
Delete "require by regulation"
Page 13, line 16:
Delete "is certified by the director as meeting"
Insert "meets"
CHAIRMAN ROKEBERG commented that this change was being made not
just to lower the fiscal note, but also to streamline the whole
bill.
MS. SEITZ explained Amendment 2. It was requested by some
companies that do medical research who felt that without the
amendment, they could not get the information necessary to their
research. Amendment 2 has been added to the confidentiality
section, saying that no individual's identity can be disclosed
without the written consent of that individual. Any information
provided without that written consent must be provided in a form
that assures that the identity of the individual cannot be
ascertained. The intent is to keep from hampering medical and
pharmaceutical research. Amendment 2 [1-LS0472\I.2, Ford,
2/26/00] read:
Page 9, line 4, following "information.":
Insert "(a)"
Page 9, following line 7:
Insert a new subsection to read:
"(b) This section does not apply to
medical information that is disclosed for
research purposes if
(1) the individual whose identity
is disclosed gives written consent to the
disclosure; or
(2) the information is released in
a form that does not reveal the identity of
an individual."
CHAIRMAN ROKEBERG commented that this will assure the privacy of
individuals participating in clinical trials of experimental
drugs.
MS. SEITZ explained Amendment 3. It makes some changes regarding
the Division of Insurance's oversight. It deletes, for example,
the requirement that the standard provisions of a contract have
to be submitted to the division and approved by the director
[which otherwise would mean that 1,000-2,000 forms would have to
be reviewed]. It also deletes some references to the director,
the regulations, and to certification by the director. There is
also an addition in Amendment 3 related to unfair trade
practices. Amendment 3 [1-LS0472\I.3, Ford, 3/3/00] read:
Page 5, lines 15 - 17:
Delete all material.
Page 13, line 20, following ";":
Insert "and"
Page 13, line 23:
Delete "; and"
Insert "."
Page 13, line 24, through page 14, line 9:
Delete all material.
Reletter the following subsections accordingly.
Page 14, line 20:
Delete "as determined under any regulations that
the director may prescribe"
Page 18, following line 8:
Insert a new bill section to read:
"* Sec. 4. AS 21.36.125 is amended by adding a
new paragraph to read:
(16) violate a provision contained in
AS 21.07."
Renumber the following bill sections accordingly.
Page 19, line 7:
Delete "sec. 6"
Insert "sec. 7"
[End of Amendment 3]
Number 1248
BOB LOHR, Director, Division of Insurance, testified by
teleconference from Anchorage, noting that he had been asked to
comment. He said he had not seen Version I, but the Division of
Insurance had been happy to work with Chairman Rokeberg and Miss
Seitz to make specific suggestions for streamlining the bill,
reducing the bureaucratic involvement, the need for regulation.
He said he believes the bill is significantly improved in that
regard, both from the point of view of operation of the bill and
the cost of it.
MR. LOHR said that originally the Division of Insurance had
significantly underestimated the fiscal impact of the contract
review provisions. In redetermining that, the division "tried to
squeeze out any kind of regulatory responsibilities that could be
handled in a different fashion." The bottom line is this: It
will be possible to reduce the fiscal note. Mr. Lohr asked
latitude to thoroughly review Version I, with the amendments,
over the weekend and to provide a revised fiscal note on Monday
[March 20].
Number 1413
CHAIRMAN ROKEBERG said he didn't mind moving it [HB 211] with the
existing fiscal note and providing for a revision of the fiscal
note down the pike. He requested confirmation that the fiscal
note would be substantially reduced.
MR. LOHR affirmed that it will be reduced.
Number 1438
REPRESENTATIVE HALCRO made a motion to adopt Amendment 1, 1-
LS0472\I.1,, Ford, 3/3/00 [text provided previously]. There
being no objection, Amendment 1 was adopted.
REPRESENTATIVE HALCRO made a motion to adopt Amendment 2, 1-
LS0472\I.2, Ford, 3/3/00 [text provided previously].
REPRESENTATIVE BRICE objected. He expressed concern about the
possibility that information about people and their illnesses
might be passed beyond a research organization and potentially
used against the person in future health insurance coverage or
otherwise. What happens if information goes beyond the arena of
research?
Number 1570
MR. JORDAN said he thought "we are talking about two different
things." He said that paragraph A is referring to medical
information already in the possession of the insurance company.
It can only be used for the purpose of the claim. under
Paragraph B, an entity such as a pharmaceutical manufacturer
[could access that].
REPRESENTATIVE BRICE withdrew his objection.
[There were no further objections to Amendment 2.]
Number 1695
REPRESENTATIVE HALCRO made a motion to adopt Amendment 3, 1-
LS0472\I.3, Ford, 3/3/00 [text provided previously]. There being
no objection, Amendment 3 was adopted.
Number 1707
REPRESENTATIVE HALCRO expressed concern about the impact of HB
211 on small business in Alaska. He said he would vote to move it
out of committee, but was not sure he was ready to support the
bill in its entirety until it is a finished product.
Number 1743
RICHARD L. BLOCK, Christian Science Committee on Publications for
the State of Alaska, testified by teleconference from Anchorage.
He said he had reviewed Version I and was pleased with it and the
amendments.
Number 1757
REPRESENTATIVE HARRIS said he still has some concerns, and
believes he has received assurances from Chairman Rokeberg that
this bill is still in progress. He said he would vote to move it
out of committee with the understanding that Chairman Rokeberg is
still working with various groups that have very serious concerns
about this. He would reserve his support on the floor until
comfortable that those concerns have been met.
CHAIRMAN ROKEBERG said he is pleased that groups that have
expressed opposition to this type of legislation in the past have
now changed their positions. He predicted that this version,
with the amendments, will win the support of those who have
opposed [the bill] in the past. He assured Representative Halcro
that he shares his concerns that there not be a negative impact
on individual and small business insurance in this state.
Number 1865
REPRESENTATIVE HALCRO made a motion to move the CS for HB 211,
Version I [1-LS0472\I, Ford, 3/3/00], as amended, out of
committee with individual recommendations and the accompanying
fiscal note, with a revision to that fiscal note pending.
REPRESENTATIVE BRICE objected.
Number 1905
Upon a roll call vote, Representatives Murkowski, Harris, Halcro,
and Rokeberg voted in favor of moving the bill out of committee;
Representatives Cissna and Brice voted against it. Therefore,
CSHB 211(L&C) was moved out of the House Labor and Commerce
Standing Committee by a vote of 4-2.
HB 378-WORKERS COMP AND WORKER SAFETY
CHAIRMAN ROKEBERG announced the next order of business would be
HOUSE BILL NO. 378, "An Act eliminating certain taxes under AS
21.09 on premiums from the sale of workers' compensation
insurance; relating to the establishment, assessment, collection,
and accounting for service fees for state administration of
workers' compensation and worker safety programs; establishing
civil penalties and sanctions for late payment or nonpayment of
the service fee; and providing for an effective date."
CHAIRMAN ROKEBERG asked Paul Grossi to explain the proposed
amendments, which read as follows:
Amendment 1 [1-GH2072\A.1, Ford, 3/2/00]:
Page 5, following line 2:
Insert a new subsection to read:
"(g) The department shall grant a credit against
the service fee imposed under (a) of this section
to an employer if (1) the employer applies to the
department for the credit on a form prescribed by
the department; (2) the employer provides proof
that the employer has paid a premium tax imposed
under AS 21.09.210 on an insurance policy; and (3)
the workers' compensation claims have been paid
under the insurance policy described in (2) of
this subsection and the claims are subject to the
service fee imposed under (a) of this section.
The credit allowed under this subsection is equal
to the amount of the premium tax paid by the
employer under the insurance policy, may not
exceed the service fee imposed under (a) of this
section, and only applies to premium taxes paid on
or after January 1, 2000."
[Note: The phrase "by the employer" was handwritten between
"paid" and "on" in the final sentence on the committee's copy of
the amendment.]
Amendment 2 [1-GH2072\A.2, Ford, 3/2/00]:
Page 6, following line 10:
Insert a new bill section to read:
"* Sec. 11. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION: COLLECTION AND REFUND OF PREMIUM TAX.
Notwithstanding AS 21.09.210, the director of the
division of insurance shall
(1) beginning July 1, 2000, cease collecting
quarterly premium taxes on workers' compensation
insurance; and
(2) subject to appropriation, refund premium
taxes collected for workers' compensation insurance
under AS 21.09.210 if the refund is required as a
result of the application of the provisions of this
Act."
Renumber the following bill sections accordingly.
Page 6, line 11:
Delete "Section 10"
Insert "Sections 10 and 11"
Page 6, line 12:
Delete "sec. 11"
Insert "sec. 12"
[End of Amendment 2]
Amendment 3 [1-GH2072\A.3, Ford, 3/2/00]:
Page 5, following line 2:
Insert a new bill section to read:
"* Sec. 7. AS 23.30.015(e) is amended to read:
(e) An amount recovered by the employer under an
assignment, whether by action or compromise, shall be
distributed as follows:
(1) the employer shall retain an amount
equal to
(A) the expenses incurred by the
employer with [IN] respect to the action or compromise,
including a reasonable attorney fee determined by the board;
(B) the cost of all benefits actually
furnished by the employer under this chapter;
© all amounts paid as compensation and
second-injury fund payments, and all service fees paid under
AS 23.05.067;
(D) the present value of all amounts
payable later as compensation, [(PRESENT VALUE TO BE]
computed from a schedule prepared by the board; [),] and the
present value of the cost of all benefits to be furnished
later under AS 23.30.095 [(] as estimated by the board; [),]
the amounts so computed and estimated to be retained by the
employer as a trust fund to pay compensation and the cost of
benefits as they become due and to pay any finally remaining
excess sum to the person entitled to compensation or to the
representative; and
(2) the employer shall pay any excess to the
person entitled to compensation or to the representative of
that person."
Renumber the following bill sections accordingly.
Page 6, line 9:
Delete "9"
Insert "10"
Page 6, line 11:
Delete "10"
Insert "11"
Page 6, line 12:
Delete "11"
Insert "12"
[End of Amendment 3]
Number 1976
PAUL GROSSI, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development, came forward to
explain the proposed amendments. He informed members that some
self-insurers purchase excess insurance, which is a stop-loss
insurance. The question asked in previous testimony on HB 378
was whether a premium tax is charged for that. He said the
answer was yes. Amendment 1 provides a way for the employer to
get credit on the annual fee for premium tax paid on any excess
insurance. He brought a list [included in the bill packet] that
shows the premium taxes collected. He said the division
approximated the total amount of premium tax collected insurance
to be $36,000 per year.
CHAIRMAN ROKEBERG asked, "They want credit for it?"
MR. GROSSI said that is correct.
REPRESENTATIVE MURKOWSKI said the credit cannot exceed the
service. She asked whether there is an occasion to have the
credit exceed the service fee and then be able to carry the
excess over to the next year to pay the service fee for that
year.
MR. GROSSI responded that it is unlikely to occur. In the event
it does, the division does not want to have to owe any money.
REPRESENTATIVE MURKOWSKI asked, "If it's in excess of, they don't
get further credits?"
MR. GROSSI answered no; that is the tax they would pay. He
referred to Amendment 2. He said it addresses concerns with the
transition period that a premium tax could be collected the same
year that an annual fee is assessed. He explained that a premium
tax is collected throughout the year. He stated:
Let's just talk about the year 2000, which would be the
first year that the user fee would be assessed on. The
premium tax would be collected in increments over some
of the larger insurance carriers; and I believe those
dates are May 31, August 31 and November 30.
What these provisions will do, will allow for the
collection to stop on July 1, and it will also make
sure that the Division of Insurance has a mechanism so
that they can return the premium taxes that were
collected. Premium taxes are collected through the
year, but they're not actually due until March 1 of the
following year.
Number 2236
CHAIRMAN ROKEBERG asked which year.
MR. GROSSI said it would be any year. [He illustrated concepts
for the committee on a whiteboard. No hard copy was referenced.]
He explained that the taxes are actually due on March 1. Some
collections do occur on May 31, August 31 and November 30.
CHAIRMAN ROKEBERG asked, "So, they're paying in arrears,
basically?"
MR. GROSSI said yes; he likened it to an income tax. The
employer pays portions of the workers' compensation insurance
policy. They pay a premium, but there is a tax on that premium.
CHAIRMAN ROKEBERG indicated July 1 is a concern because it is the
end of the fiscal year. He asked Mr. Grossi to show how a $1.5
million surplus is obtained in FY01, starting with July 1, 2000.
MR. GROSSI explained that Amendment 2 allows for the collection
of the premium tax to cease on July 1, 2000; it also allows for
the refund of premium taxes.
CHAIRMAN ROKEBERG wondered if there is a larger company that can
do this on a quarterly basis.
MR. GROSSI said yes. If HB 378 passes, the fee will be due March
1, 2000, based on any and all claims paid throughout the year.
CHAIRMAN ROKEBERG said he thought the bill would become effective
January 1.
MR. GROSSI affirmed that. In response to a further question, he
said there is no fee income until March 1, 2001.
CHAIRMAN ROKEBERG stated, "There's a fiscal note with a $2
million (indisc.) fee?"
MR. GROSSI explained:
What is needed for both workers' comp[ensation] and for
OSH, or safety programs, is approximately 3.5 ...[ends
midspeech because of tape change.]
TAPE 00-24, SIDE B
... and that's why we can reduce our budgets by $1.5
million in 2001.
CHAIRMAN ROKEBERG asked what happens if refunding begins after
July 1. He asked if the general fund would have lower revenue.
MR. GROSSI replied, "There's never been a time."
REPRESENTATIVE HALCRO said:
That's why on Monday, when he talked about it, he
talked about how the budget subcommittee really wanted
this pushed forward, because they were going to be
counting the fact that they only had to fund a portion
of the fiscal year, because that last March through
July they would obviously collect fees.
CHAIRMAN ROKEBERG noted that a letter from Bob Lohr, Director,
Division of Insurance, Department of Community and Economic
Development, explains the time line proposed in HB 378.
Number 0089
MR. GROSSI addressed subrogation of fees:
The employer has the right to [recover] all the
workers' comp[ensation] that they pay if there's a
third-party malfeasor out there who's responsible for
the injuries, say, if it's an automobile accident and
there's someone at fault or a product liability or
anything. ... So, what this amendment does [Amendment 3
- 1-GH2072\A.3, Ford, 3/2/00], we think that there's
probably enough authority to collect this fee as well,
but this clarifies that, and it ... names that fee as
part of what can be collected as the result of a third-
party lawsuit.
CHAIRMAN ROKEBERG asked whether "the term recovered by the
employer under an assignment" includes the rights of subrogation.
MR. GROSSI responded yes. He clarified that an employee can make
a claim against the third party or the employer can do it, if the
employee chooses not to.
Number 0171
BOB LOHR, Director, Division of Insurance, Department of
Community and Economic Development, testified via teleconference
from Anchorage. He said the division had provided an explanation
of the time line in a concrete example [included in the bill
packet] with the hope of clarifying that there would already be
some funds paid under the premium tax, which would be necessary
to refund if the proposed cut-over dates in HB 378 were adopted.
CHAIRMAN ROKEBERG asked whether Mr. Lohr was comfortable with
Amendment 2.
MR. LOHR replied yes.
REPRESENTATIVE MURKOWSKI said she thought Mr. Grossi was also
going to look into tightening up the definition of a claim.
MR. GROSSI said he believes the definition is tightened up. He
referred to Section 6, page 3, lines 23 through 24, regarding the
payment of the fee to the department each year at the time the
annual report is filed. This is outlined in AS 23.30.155(m). He
noted that he had a copy of the annual report form [included in
the bill packet] which outlines all of the payments. For 12
years, payers have used these forms.
Number 0312
BRAD THOMPSON, Director, Division of Risk Management, came
forward to testify on HB 378. He commented:
We, as a self-insured employer, an authorized self-
insurer, file this annual report as do other self-
insured or commercial insurers. Annually, under the
law, and it's cited here under section (m) that we are
required to report the total amount of all compensation
by type. The compensation by type is detailed in the
Department of Labor's reporting form, so each employer
that is self-insured or a commercial insurer is
required to complete for each claimant that is paid any
amount of money in these categories or compensation by
type, we need to file each year with the department.
And this is a practice that is explicitly clear to
those that do and file these reports.
I think the confusion earlier in the week was from a
question: ... What is the basis of the new fee
assessment? It will be based on the total amounts
reported in this annual filing. This is not unlike an
IRS filing for those employers or insurers that use
computers; there's a specific data file layout that we
have to comply to. There's no question as to the
amounts and types of payments that need to be reported
in this filing, which will be the basis for the new
fee.
REPRESENTATIVE MURKOWSKI said:
Recognizing that anything that's on the annual report
is part of what will be construed as a claim, I used
the term the other day, the one that makes me "squishy"
is number 21, which is "other". What could go there?
... This is a form that is part of Department of
Labor's; you came up with the form. I'm sure there's
some regulations to it, but couldn't you decide
tomorrow that you wanted to change this form ...?
MR. GROSSI specified that it does have to conform with the
statute in terms of the type.
REPRESENTATIVE MURKOWSKI asked Mr. Grossi to address the issue
regarding what could be considered "other".
MR. GROSSI commented that travel could be part of "other".
MR. THOMPSON interjected:
There are other specific reimbursable expenses. ... I
can tell you that for the state's report, I have a copy
of our filing. There's few costs included in the
"other" column. They're mostly in the first four
categories, which is the medical, and then the types of
disability payment: temporary total, temporary partial
or permanent partial impairment disability awards.
That's the significant sums. The others are pretty
nominal. But, again, the insurance carriers or the
self-insureds understand and do file.
Number 0449
REPRESENTATIVE MURKOWSKI stated:
You say you're tied to what's in the statute, and
that's correct. But if you're still allowing for an
"other", and that other may include, to use a specific
example, travel, ... I don't necessarily see how that's
tied into the statutory language here. That's my
concern with how we're defining claim. I don't want
claim to be defined by a form that could be changed
willy-nilly.
MR. GROSSI handed out a summary of the totals for the last five
years on all the various categories [included in bill packet].
He pointed out, "If you wanted to limit them to certain types of
things, you'd need to change the formula in some fashion, which
is fine. There's nothing wrong with doing it that way."
REPRESENTATIVE MURKOWSKI indicated it helped, but she still had a
problem with the "other" category on the annual report form.
MR. GROSSI stated, "It would be up to the committee if you wanted
to limit it to certain payments, but then we'd have to adjust the
formula to deal with that."
CHAIRMAN ROKEBERG asked, "In this report, if you had a small
business, and you have more employers that get injured, do you
have to fill this report out?"
MR. GROSSI replied that for a self-insurer, yes. Generally,
small employers will not be self-insurers.
CHAIRMAN ROKEBERG said, "No, you'd go to your underwriter."
MR. GROSSI answered, "Actually, it's the insurance company that
would sell this. You'd be part of that pool."
CHAIRMAN ROKEBERG commented, "Right. Then they fill out the form
for you. That's part of their premium. So, it's not a burden or
even a technical problem for a small business."
MR. GROSSI replied:
This is already being done. ... That's why we did it
this way, actually, and that's what led to the March 1
problem, is because we didn't want to change the way we
did business or the way that the employers and
insurance companies did business. And so it does have
that snafu period.
CHAIRMAN ROKEBERG asked, "And your testimony was that the self-
insureds submit to this currently?"
MR. GROSSI answered yes.
CHAIRMAN ROKEBERG wondered, "So, it's your responsibility to make
sure they're fulfilling their obligation to the employee?"
MR. GROSSI said that is correct.
Number 0649
CHRIS ROSS, Corporate Health, Safety and Environmental Manager,
NANA Development Corporation, came forward to testify on HB 378.
He stated that the amendments fix all of the problems he
previously had concerning subrogation.
REPRESENTATIVE HALCRO made a motion to adopt Amendments 1, 2 and
3 [text provided earlier.] There being no objection, Amendments
1, 2 and 3 were adopted.
Number 0710
REPRESENTATIVE HALCRO referred to previous testimony on HB 378
from Kevin Ritchie, Alaska Municipal League, and Kevin Smith,
Joint Insurance Association (JIA). He pointed out that both had
said passage of HB 378 would have negative effects on the JIA.
He stated:
As a matter of fact, in Mr. Ritchie's written testimony
he says that "additional state mandates without raising
taxes or cutting local services cannot be absorbed."
And I noticed in Mr. Smith's correspondence he writes,
"Unless there is an increase in services, I see no
reason to cost shift from the private insurance
industry to the public sector at a time when local
government entities are struggling for their survival."
But ... before we pass the tin cup for the [JIA], I'd
like to bring to your attention a position paper dated
just three weeks earlier for another piece of
legislation, HB 404, where the executive director of
the [JIA] says, and I quote, "The [JIA] presently
exceeds all national pooling standards by a significant
margin and has admitted assets of approximately $16
million. Since the [JIA] is never exposed to more than
$250,000 on any loss, it would take more large losses
in a single year than we have experienced in the past
12 years to exhaust the financial resources of the
organization."
So, ... in response to their concerns about financial
harm, I would say that it looks like they're in pretty
solid shape and they should be able to pay some fees.
REPRESENTATIVE BRICE made a motion to move HB 378, as amended,
out of committee with individual recommendations and the attached
fiscal notes. There being no objection, CSHB 378(L&C) moved out
of the House Labor and Commerce Standing Committee.
CHAIRMAN ROKEBERG declared a brief at-ease at 4:38 p.m. The
meeting was called back to order at 4:40 p.m.
HB 398-LIFE AND HEALTH INSURANCE GUARANTY ASSN
Number 0832
CHAIRMAN ROKEBERG announced that the next order of business would
be HOUSE BILL NO. 398, "An Act relating to the Alaska Life and
Health Insurance Guaranty Association."
JOHN MANLY, Staff to Representative John Harris, Alaska State
Legislature, introduced HB 398 on behalf of Representative
Harris, sponsor. He read from the sponsor statement:
The purpose of House Bill 398 is to make changes to the
Alaska Life and Health Insurance Guaranty Association
Act, AS 21.79, which provides a mechanism to protect
policy holders and claimants in the event of the
insolvency of a life and health insurer's license to
sell policies in Alaska.
The Alaska Life and Health Insurance Guaranty
Association membership is mandatory for every life and
health insurer licensed to sell policies in the state.
The association, in order to fund certain outstanding
obligations of life and health insurers that have been
put into receivership assesses its members. The
association works closely with the Director of
Insurance, who is the receiver for insolvent insurers.
Alaska's current law is based on an earlier of a
National Association of Insurance Commissioners (NAIC)
model Act. HB 398 updates Alaska Statutes to bring
them into close conformity with the most recent NAIC
model Act. The NAIC model Act has been updated to
reflect lessons learned at a nationwide level from
application of the model Act to actual insolvencies
experience since the last revision.
HB 398 will allow the Alaska Life and Health Guaranty
Association to better meet its intended purpose of
protecting Alaska policy holders and claimants.
Updating the Act to comply with the latest model Act
provides the added benefit of uniformity among the
states in responding to insurer insolvencies. The
Alaska Life and Health Insurance Guaranty Association
supports passage of HB 398.
Number 0976
JOHN GEORGE, Lobbyist for American Council of Life Insurance,
Juneau, noted that two other representatives of the council, Mary
Beth Stevens and Robert Sweeney, also were participating by
teleconference from Washington, D.C.
MR. GEORGE explained that the American Council of Life Insurance
had asked Representative Harris to introduce HB 398. Uniformity
among the states makes it much easier for insurers to deal with
insolvencies. The bill is largely technical. The council has
been working closely with the Division of Insurance, and they
have reconciled 18 of 20 points of difference. The remaining two
points will be dealt with in proposed amendments.
CHAIRMAN ROKEBERG noted that the remaining controversy centers on
the words "or intervene" in HB 398.
Number 1086
REPRESENTATIVE HALCRO moved to adopt the proposed committee
substitute (CS) for HB 398, Version G [1-LS1376\G, Ford, 3/3/00],
as the working document before the committee. There being no
objection, it was so ordered.
MR. GEORGE explained that Amendment 1 presents the American
Council of Life Insurance's recommendation to add the words "or
intervene" after the word "appear" in two places on page 13,
lines 20 and 27 of Version G. [The language on line 20 would
then read, "(r) The association is entitled to appear or
intervene in a court or agency proceeding ...." The language on
line 27 (beginning on line 26) would then read, "The association
also has the right to appear or intervene before a court or
agency in another state ...."] Mr. George said that is the
difference the council has with the Division of Insurance. He
said the aforementioned two people on teleconference were the
experts best qualified to comment.
Number 1155
REPRESENTATIVE MURKOWSKI asked whether it was necessary to add
two public members to the board, and whether the American Council
of Life Insurance was in agreement with the insurance guaranty
association regarding that.
MR. GEORGE said that language is a part of the NAIC model, and
the council has agreed to accept it. However, the council does
not see a need for public members because the board is a
technical body that is doing ministerial functions, closely
supervised by the Division of Insurance, so already has public
oversight. Also, there is no way to compensate public members
for their service, and adding two more people complicates the
logistics of meeting.
REPRESENTATIVE MURKOWSKI said as she reads the language of the
bill, "the director may appoint," it appears to be left to the
director's discretion whether or not to appoint up to two public
members.
MR. GEORGE said that was a concession that Mr. Lohr had made.
The NAIC model specifically says there "shall be" public members.
Number 1377
MARY BETH STEVENS, Legislative Director for Alaska, American
Council of Life Insurers, testified by teleconference from
Washington, D.C. House Bill 398 is very important to the
council, which has enjoyed a very good working relationship with
the Division of Insurance. Robert Sweeney is the technical
expert to whom questions should be addressed.
Number 1446
ROBERT SWEENEY, Counsel, American Council of Life Insurers,
testified by teleconference from Washington, D.C. He confirmed
that he was available to answer any questions.
CHAIRMAN ROKEBERG referred to the Property and Casualty Guaranty
Fund Act, which the committee had reviewed earlier in the
session. He asked how the "bar date issue" is handled in HB 398.
MR. GEORGE said the "bar date issue" with respect to Property and
Casualty had to do with bar dates for claims for workers
compensation because they tend to come in long after the
insolvency of an insurer. Life insurance guaranty associations
treat claims a little differently because a life insurance policy
tends to go on for a longer period of years before a claim is
filed; therefore, life insurance guaranty associations try to
find "new homes for those policies, to get them transferred to a
viable insurance company." Bar dates are not an issue at all in
this case.
Number 1551
DONALD THOMAS, Executive Director for the Alaska Life and Health
Insurance Guaranty Association, testified by teleconference from
Anchorage. He said the current chair, James Jackson, apologizes
for not being able to participate. However, he had sent a letter
to Representative Harris dated March 2, stating that the Alaska
Life and Health Insurance Guaranty Association (ALHIGA) is in
favor of passage of the proposed CS to HB 398.
CHAIRMAN ROKEBERG asked Mr. Thomas if he had seen the amendment.
MR. THOMAS said he had not seen the amendment per se, but he
understands what it says and is familiar with the basis of the
controversy.
CHAIRMAN ROKEBERG asked for an explanation of the controversy.
MR. SWEENEY spoke in favor of the amendment, which the council
considers to be fully consistent with the legislation's primary
intent. Among other things, HB 398 is designed to streamline the
appropriate, efficient and cost-effective handling of life and
health insurance insolvencies. To provide ALHIGA the right to
intervene before the receivership court, any appropriate Alaska
agency, or foreign receivership court does not needlessly expand
the role of ALHIGA. Rather, the amendment offers the state
guaranty association the necessary authority to intervene when
the rights of policy holders, member insurers, or the receiver is
under attack.
MR. SWEENEY said that in many instances, it is important to note
that ALHIGA may be seeking to assist the Division of Insurance,
acting as the receiver for a financially troubled or insolvent
life or health insurance company. Unlike the Property and
Casualty Guaranty Fund Act, which the committee reviewed earlier
in the session, the Life and Health Act, Chapter 79 - like all
state life and health guaranty association Acts - requires the
guaranty association to continue coverage for policy holders.
Moreover, the association is often the state's largest creditor.
Providing ALHIGA the right to intervene will merely codify an
appropriate right that will work to the benefit of member
companies taking up the policyholders as well as state-appointed
receivers. He agreed with Mr. George that the right to intervene
is contained tn the most recent version of the NAIC Life and
Health Insurance Guaranty Association model.
Number 1854
REPRESENTATIVE HARRIS said in light of the time, he had no
objection to holding the amendment, which would be considered in
the House Judiciary Standing Committee instead.
Number 1873
MR. LOHR commented on the productive and cooperative working
relationship, which may be a model in resolving many fairly
contentious issues before bringing legislation before the
committee. In this one matter [regarding the right to
intervene], he said, "We have just respectfully agreed to
disagree." The Guaranty Fund Act and liquidation statutes
already give the association [ALHIGA] standing to appear in
receivership cases and to assert its interests. Providing for
intervention is unnecessary and may imply that the legislature is
granting broader authority to the guaranty fund on a par with the
authority of the receiver.
MR. LOHR indicated [legal counsel for the department] had not
done an exhaustive search of case law, but one case they came
across was a Court of Appeals case in Maryland. In that case,
the court allowed intervention based on statutory language nearly
identical to the language in [Alaska's] receiver statute and to
that proposed in Version G of HB 398: that is "standing to
appear" and the associated obligations. So there is at least one
case that supports that the language [already] is adequate.
Adding the phrase only adds confusion in that [the department's]
attorneys were not able to establish a legal distinction between
"standing to appear" and "the right to intervene."
CHAIRMAN ROKEBERG inquired, "So your objection basically is that
it creates ambiguity because it is redundant, because by
'appearance' you already have the right 'to intervene'?"
MR. LOHR said that is correct. The language in current law is "a
guaranty association or foreign guaranty association has standing
to appear in a court proceeding." The language in current law,
which this bill proposes to amend, says "the association is
entitled to appear in the court proceeding in the (indisc.)
insolvent insurer." Mr. Lohr said, "The bill that you have
continues that approach and does not adopt intervention, and
intervention could be ambiguous, seems unnecessary, and might
conceivably be interpreted to interfere with the exclusive
authority of the receiver.'
Number 2133
CHAIRMAN ROKEBERG observed that the limits on both the life
insurance and health insurance coverage don't really appear to
have been expanded. He asked: When was this statute last
redone, and how long have these limits been in place?
MR. THOMAS said those limits have been effect since the statute
was adopted in 1990.
CHAIRMAN ROKEBERG asked if there was need to adjust those because
of inflation.
MR THOMAS said he wanted to check the language of the model Act.
CHAIRMAN ROKEBERG asked how current that was.
MR. THOMAS said the most current version is dated 1999, and those
same limits are in the model Act as well.
Number 2291
MR. SWEENEY noted that the coverage limits before the committee
are based on the most recent version of the NAIC model. Those
amendments to the model Act were adopted in 1997.
CHAIRMAN ROKEBERG said, "I'm not sure I understand the
distinction between the $100,000 and the $500,000."
MR. SWEENEY said those amounts establish limits for individual
policy owners for different types of policies. In a life and
health insurance insolvency, the objective is to continue
coverage and keep it going.
TAPE 00-25, SIDE A
Number 0014
MR. SWEENEY noted that in a life and health insolvency, the goal
is to continue coverage. Therefore, the goal obviously would be
not to hit that cap.
CHAIRMAN ROKEBERG asked whether anyone else wished to testify, or
if there was any objection to closing testimony on HB 398. There
being no objection, it was so ordered.
Number 0080
REPRESENTATIVE MURKOWSKI said she did not think Amendment 1 was
as problematic as the director had indicated. If one has the
right to appear anyway, one also is going to have the right to
intervene.
CHAIRMAN ROKEBERG agreed but said that if it is only a matter of
redundancy, and if everybody wants it in here to be consistent
with the model Act, so be it.
REPRESENTATIVE MURKOWSKI made a motion to adopt Amendment 1.
There being no objection, it was so ordered.
Number 0175
REPRESENTATIVE HALCRO made a motion to move HB 398, Version G [1-
LS1376\G, Ford, 3/3/00], as amended, out of committee with
individual recommendations and attached fiscal note. There being
no objection, CSHB 398(L&C) moved out of the House Labor and
Commerce Standing Committee.
CHAIRMAN ROKEBERG declared a brief at-ease. The meeting was
reconvened at 5:09 p.m.
HB 207-LICENSE HOME INSPECTORS
Number 0222
CHAIRMAN ROKEBERG announced consideration of HOUSE BILL NO. 207,
"An Act relating to the registration of persons who perform home
inspections; and providing for an effective date."
JOHN MANNINEN, Legislative Aide to Representative Norman
Rokeberg, Alaska State Legislature, clarified that the draft of
the bill under consideration was Version W.
Number 0273
REPRESENTATIVE HARRIS moved to adopt the proposed CS for HB 207,
Version W [1-LS0132\W, Lauterbach, 3/3/00], as the working
document before the committee. There being no objection, it was
so ordered.
Number 0300
MR. MANNINEN compared Version W with the preceding Versions S and
V:
Page 1 retains the title and added "relating to home
inspection requirements for residential loans purchased
or approved by Alaska Housing Finance Corporation".
Page 2, under Licensure, deleted line 23, "directly",
from the S version and deleted .050(b)(3), "has not
performed home inspections for more than two years
without being licensed under this chapter." The
intent of that was to allow an associate home inspector
to be able to work performing home inspections beyond
two years, whether or not the associate becomes a
licensed home inspector.
Page 3, line 1-3, under Qualifications, deleted
"practical" under Section 08.57.060.
CHAIRMAN ROKEBERG clarified that that was the change regarding
the examination, requested by the department.
MR. MANNINEN noted that also deleted, on line 8, was "in
consultation with representatives of the construction industry".
CHAIRMAN ROKEBERG pointed out that it now just says "passed the
appropriate examinations." As Ms. Reardon had recommended, the
change loosens it up.
MR. MANNINEN continued:
Page 4, line 6 [paragraph (4)], under Fees, it added,
after "registration", "and renewal of registration".
Under insurances in the W version, page 4, lines 25-31,
deleted workers' compensation because it is redundant
to the law now, and we deleted errors and omission
(E&O) insurance. The question that arose at the last
meeting was in a one-person shop; and legislative
counsel said under AS 23.30.239, workers' compensation
insurance is permissive for one-person shops, so that
solved that problem without having it in the bill.
CHAIRMAN ROKEBERG asked whether the words "public liability" were
still included.
MR. MANNINEN said that is correct.
Number 0552
CHAIRMAN ROKEBERG said he would like to discuss the E&O insurance
deletion. It was a policy call. He has been in negotiations
with the engineering and architecture community for the last
several weeks trying to placate their concerns. On the
recommendation of Senator Loren Leman, a civil engineer, the
requirement for home inspectors to have E&O insurance has been
deleted. The rationale is this: There is not one licensure in
Alaska that mandates any kind of E&O insurance. The Senator's
concern was that to mandate it statutorily creates a problem. So
it was the decision of the chairman and the bill sponsor to
remove the entire clause.
Number 0711
MR. MANNINEN continued:
The S version's advertising prohibition was deleted in
the W version, and that was based on Catherine
Reardon's comments at the last meeting that the current
construction contractor law already provides for that
and it was redundant to have it in here.
Under Section 08.57.210, line 3, Suspension of License,
immediately before "suspended", added "if the required
insurance ceases to be in effect".
Residence language was moved from the Inspection Report
on page 6 to the Definitions on page 8, lines 26 and
29, defining residence, single family, duplex, and so
forth.
Number 0791
On page 7, to Prohibited Acts were added "unless the
disclosure is made (a) more than one year after the
date of the report, and (b) to a subsequent client who
requests a home inspection of the same premises." The
intent of that is that home inspector would basically
own the home inspection report after one year. In the
previous versions, the home inspector would not be able
to divulge that to anyone, and this would allow that
home inspector to own the report and to resell it or
reuse it for a subsequent client.
CHAIRMAN ROKEBERG said he wasn't sure the draft had captured that
exactly right. The idea is to have a one-year life of the
report. It will be out of date after that. He suggested the
need to work further on that.
Number 0873
MR. MANNINEN mentioned that deleted was some language in AS
08.57.
CHAIRMAN ROKEBERG clarified that on page 8, line 2 of Version W,
it takes "civil" out of engineer, which allows any engineer to do
that. Also deleted was E&O insurance and continuing education
for the engineers.
MR. MANNINEN further stated that language was deleted on page 10,
lines 3-6. It basically grandfathers in the International
Association of Electrical Inspectors' ICBO license until January
1, 2002, at which time they would have to become relicensed as
home inspectors in order to continue to do home inspections.
That allows them the same transition period as the others.
CHAIRMAN ROKEBERG concluded, "What we tried to do was to
accommodate some of the objections and make the whole simpler."
Number 1037
REPRESENTATIVE CISSNA said it was her understanding in talking
with representatives of the engineers and architects that there
is some real concern about the use of the individual seal of the
engineer or the architect by people who are in training.
CHAIRMAN ROKEBERG explained that this mandates that the person in
training cannot use the seal; only the person who has the
authority to use the seal can use it.
MR. MANNINEN explained that the person who is licensed and has
the seal has the authority and the responsibility to use that
seal appropriately. That person's name and reputation goes with
it. There are engineers and architects in training who are
working for them and do this work, and they [the licensed
professionals] directly supervise the work. The seal is the
guarantee for the homeowner, for the person buying the service,
and is a consumer protection guarantee for the home buyer.
Number 1129
CHAIRMAN ROKEBERG said this provision is basically a compromise.
If the engineers and architects don't want to be licensed as home
inspectors, then they have to use their seals, to put their seals
on the line.
REPRESENTATIVE CISSNA said the compromise is [between this and]
paying fees and updating education and becoming a licensed home
inspector. There are, apparently, architects and engineers who
feel that the seal means something quite different from being a
home inspector. That home [being inspected] is not the creation
of the architect or engineer.
CHAIRMAN ROKEBERG said it is the inspection that is their work.
REPRESENTATIVE CISSNA said an inspection is different from having
designed the home and built it, however.
CHAIRMAN ROKEBERG acknowledged that some people object. The
issue here is to [ensure that] the home inspection people who are
not engineers will be licensed, will have continuing education,
and will have a regulatory scheme overlooking them to protect the
consumer. Right now, engineers and architects have their
professional board of architects, engineers, land surveyor and
landscape architects to oversee them. But they don't have any
provisions to regulate home inspectors. An architect or engineer
who does work that is not sealed basically has no liability. The
seal puts one's professional competency and standing behind that
work, which makes one liable under one's engineering
certification; one could be disciplined and that board could come
after the person. The idea is a level playing field. Engineers
want to be able to do home inspections without being licensed
home inspectors. They can't have it both ways. What the law is
saying is that if one does not want to use one's seal, then one
needs to become a licensed home inspector.
Number 1326
REPRESENTATIVE CISSNA noted that the concern that was voiced to
her was about those in training.
CHAIRMAN ROKEBERG concurred that she might have an interesting
point there.
REPRESENTATIVE CISSNA said it would be better, in that case [of a
person in training], to have the person go through the licensing,
as every other home inspector does, because that person really
isn't qualified to put on the seal.
CHAIRMAN ROKEBERG explained that there is an attempt being made
to accommodate some "peculiar things." There is a gentleman [a
licensed engineer] here in Juneau; his son is an engineer but
doesn't have his stamp. The son works [for the father] like an
associate home inspector. The bill provides that an associate
home inspector can be supervised by the licensed home inspector,
and [this provision provides] the same thing for the associate
engineer who works under the supervision of a licensed engineer
whose stamp has to be applied [to the associate's work].
MR. MANNINEN said the associate engineer in training or associate
architect doesn't use the employer's seal, but can become a
licensed home inspector. That still wouldn't allow such people
to use the seals of the registered architect or engineer.
CHAIRMAN ROKEBERG restated that Representative Cissna may have a
good point about the associates. He said he thought her question
was how the architect or engineer can seal somebody else's work.
REPRESENTATIVE CISSNA affirmed that, reiterating that apparently
there is some real concern about that aspect.
MR. MANNINEN noted that the concern that one of the engineers had
expressed to him was a little different from that. It was
regarding not having any time off if they were to required to
seal; since they couldn't authorize anyone else to use their
seals, that would be against the law, and that the associates
wouldn't be able to do the work without their direct supervision.
CHAIRMAN ROKEBERG countered:
Does that mean doctors can't take a vacation and look
after patients? Of course they can, because they make
arrangements for other competent professionals to look
after the patients. In this case, if an engineer wants
to leave town, he gets someone else who has a stamp to
supervise the associate's work.
REPRESENTATIVE CISSNA said if an engineer or architect left town,
she would not want somebody in training to take over. However,
she could see that it would be valuable experience for an
assistant who was working toward engineering licensure to inspect
homes as a way to really get the grounding.
CHAIRMAN ROKEBERG explained that the engineer/architect has to
seal the plan under HB 207 because he/she is responsible and
liable for the activities; the same is done with building
designs. The engineer/architect doesn't have to do the actual
design; one can put one's stamp on it if the person reviews it
and approves it, and he or she stands responsible for it. That's
what the issue is here. If engineers and architects insist on
being able to operate because they are engineers and architects,
they have to put their stamp on it, because that's what makes
them architects and engineers.
REPRESENTATIVE CISSNA asked about their assistants.
CHAIRMAN ROKEBERG said it is typical for assistants to draw the
plans and the architect to stamp the drawing.
REPRESENTATIVE MURKOWSKI cited another example: The first-year
attorney drafts the pleadings and the boss signs them, and it has
the boss's name in it because there is insurance through the
firm, and, ultimately, the senior partners are responsible.
Number 1674
CHAIRMAN ROKEBERG again said he appreciates what Representative
Cissna is saying. There is the responsibility there, so they
[architects and engineers] are stamping somebody else's work.
But if they want to operate like that with employees and
associates, somebody has to be responsible for them or they have
to be licensed. Consumer protection is the objective here.
[CHAIRMAN ROKEBERG asked anyone remained online at the
Legislative Information Office office in Anchorage. That office
replied that everyone had left there.]
CHAIRMAN ROKEBERG said he wouldn't mind moving the bill, and
asked Representative Cissna how she felt about it.
REPRESENTATIVE CISSNA said she did not feel comfortable with
moving it. There is some sense in having licensure and training
in this other field [home inspection], and it seems like a
different field than the engineering and the design of homes.
CHAIRMAN ROKEBERG concurred that they are different fields, and
said that is one of the issues here. The building inspectors
don't want to exempt [from licensure] the architects and
engineers.
REPRESENTATIVE CISSNA said she wants to look into the point of
contention further. In response to Chairman Rokeberg, she
indicated she could do that by Monday afternoon.
CHAIRMAN ROKEBERG appointed her "a subcommittee of one to check
it out." [HB 207 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:40 p.m.
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